Posted on 10/08/2017 7:24:17 AM PDT by Kaslin
The mayors doing their utmost to get Amazon's second headquarters for their cities are having a grand time informing Jeff Bezos of everything they have to offer. They should enjoy this part of the chase because what comes next won't be much fun.
They are about to get some insight into how the search for talent goes in Major League Baseball. St. Louis Cardinals general manager Michael Girsch noted the crucial moment in pursuing a coveted free agent player. "We sometimes call it your 'puke point,'" he told the St. Louis Post-Dispatch. "Sometimes you make an offer and you're not sure whether you'll puke if he says yes or puke if (he says) no."
Every city wants the Amazon facility, and why not? The company says it will spend at least $5 billion building it and eventually employ up to 50,000 workers. "This is the trophy deal of the decade," one expert told The New York Times.
Chicago Mayor Rahm Emanuel vowed, "It's going to be Chicago, county and state with one voice and all resources, all hands on deck and all creativity to that effort." He's not the only official in the area with big dreams. Waukegan, Aurora, and Gary also plan to enter the contest.
So does just about every other big city, from Los Angeles to Denver to St. Louis to Miami. It would be easier to list the ones that are staying out. Even Fargo-Moorhead, straddling the border of North Dakota and Minnesota, plans a bid -- which would have to be rich to offset the average daily January temperature of 9 degrees.
New York City? Submissions have come from 23 neighborhoods. At least a dozen cities just in North Texas have hopes. Stonecrest, Georgia, offered to create a new town and name it Amazon. From the tenor of the responses, the only problem the winner will have is building enough vaults to hold the riches that will pour in.
What the local and state officials hoping to land the deal don't acknowledge to their constituents is that the company holds all the cards. There is only one Amazon second headquarters on the horizon. With a monopoly on something that is in great demand, it can pit aspirants against one another to boost its profits. The governments that want the facility will have to take part in a merciless bidding war that will extract every nickel they have to spend, if not more.
"Amazon didn't become Amazon by leaving money on the table or being organized as a 501(c)(3) charity," University of Chicago economist Allen Sanderson told me. "If it's really worth $x million to the city of Chicago to land Amazon, why would that firm not charge us, one way or another, $x million minus 50 cents to come here?" If Chicago won't pay the toll -- in tax incentives, direct subsidies, infrastructure outlays and other concessions -- another place will.
We have seen this movie before -- every time the International Olympic Committee takes bids for the Summer or Winter Games, enticing cities to spend themselves into poverty to play host.
Reports the website FiveThirtyEight, "Host cities almost invariably fail to cover Olympics costs with associated revenues (for instance, in 2012 London took in $3.5 billion in revenues and shelled out something like $18 billion to host the games), leaving them with piles of debt and various useless venues."
Cities are at even more of a disadvantage with Amazon because the games come along every two years -- and the next corporate undertaking of this magnitude may not. Another difference is that many city officials have learned from the ruinous experiences of previous hosts, which are not available here.
It may be helpful for politicians and civic leaders to remember that while Amazon may offer a once-in-a-lifetime chance, the opportunity to spawn growth and attract businesses is perpetual and far less expensive.
A locality that complements its natural advantages (location, climate, culture, safety) with responsible governance, reasonable taxes, modern infrastructure, good schools and cost-effective regulation will prosper over time without paying ransom to corporate giants. A locality that neglects such essentials -- looking at you, Chicago -- will struggle.
Trying to make up for self-imposed shortcomings by trying to buy Amazon's favor is a bad strategy. After the decision is made and Amazon arrives, many cities will be sorry they lost and one will be sorry it won. And every city will know its puke point.
For a guy who was born in Chicago, Rahm The Tiny Dancer seems to have forgotten all about Motorola and Harvard.
Yes, those are good points from the city/corporate perspective. But then there’s all the ancillary growth from the 50,000 employees. They will be paying taxes, using local suppliers, buying homes and shopping for their local needs.
I can’t remember the exact numbers, but for every $1 a company pays that dollar circulates in the local economy a multiple of x times. Yes, it will be worth it to entice Amazon to bring those jobs to your town. It’s much more appealing than building an NFL stadium at taxpayer expense.
Yes, it's a lesson in CAPITALISM and FREE ENTERPRISE. Too bad it seems lost on so many.
This is disgusting on so many levels.
Businesses getting huge subsidies and deals, while others do not, is not equal treatment under the law.
And how is it fair to make local retailers, often family businesses, to pay taxes to subsidize their competitor who’s vision is their destruction?
Create a town would be a tempting offer.
Could name Streets and buildings after friends and family.
Realistically, I imagine, logistics and a corporate environment are the top priorities.
It’s not quite analogous. Olympics venues are useful for two weeks and afterward might as well be torn down; while an Amazon headquarters will at least have a few years of life in it before becoming obsolete.
Not just the multiplier of 50,000 people it’s new businesses the sell to Amazon that will be locating nearby.....50,000 is just the start
Here are Rahm's presentation points:
Pros: High murder totals will give Amazon do-gooders something to work on; Lots of people moving out freeing up housing; Poor fiscal management keeps Chicago in the news; Good sailing on the lake.
Cons: none
NYS sent $3 bil down the rat hole trying to bribe...er, incentivize business to stay. It didn’t work.
“Not just the multiplier of 50,000 people it’s new businesses the sell to Amazon that will be locating nearby.....50,000 is just the start”
The city of Tallahassee, briefly, had a pro-business administration. They bribed in two international companies to locate here, provide at their peak about 750 jobs, mostly off the welfare rolls. (My those were pleasant people to work with. /s). So the city built the buildings and charged $1 per year rent. The newspaper and the local universities went politically nuts over the deal. But the city, which owns the utilities, charged outrageous power, sewer and water fees; $33,000 per month/each just on power and this was 15 years ago. So the city really did well. New businesses proliferated to serve the companies. They more than paid for themselves. Then, the city’s politics changed and they actively chased businesses away. The people who got hurt were the suddenly unemployed blacks who had been hired off the welfare rolls. Then, lots of ancillary companies went bankrupt and closed their doors too, leaving empty buildings. Of course, the people who did this were not harmed at all. Limousine liberals all.
One piece of advice for these cities bending over to land Amazon: Watch, as the NFL model collapses. Be careful who you hitch your wagon to.
What exactly are these 50,000 employees going to be doing for Amazon anyway -- in a headquarters operation? I think the company is throwing some serious B.S. numbers out there on this one.
Amazon knows the exact number. They will squeeze the winning city until there is nothing left.
Not just the winning city. The state’s taxpayers will be screwed, too.
Or they may be trying to extort Seattle and the WA state gov’t. That’s my bet.
How about countries with two Capitals?
The closest I can think of is a company and a subsidiary in two different locations, and one will always be subservient to the other.
Either Amazon is thinking of corporate suicide (unlikely), or they are really thinking of setting up a subsidiary, or the functional equivalent, to take on some new line of business.
For the same reasons that animals have only one head, companies do not have two headquarters.
He was talking about how it is more appealing to use tax dollars to attract Amazon instead of the NFL. That isn’t hard to understand and it is NOT Capitalism or Free Enterprise.
Or Amazon is attempting to extort concessions from Seattle, its county, and/or state.
It also doesn’t work.
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